TUI AG Financial Year 2007 Interim Report 1 January 30 June 2007

Transcription

1 TUI AG Financial Year 2007 Interim Report 1 January 30 June 2007 B279 hotels swimming pools + 165,000 beds = 36 million accommodations B5 continents countries x quality + 2 x strong brand + 2 x size = Security & prospects B1 access + 9 source markets = 20 million offerings = 36 million accommodations B5 continents countries distribution agencies = 1 IT system B138 container & prospects B1 access + 9 source markets = 20 million offerings B11.1 million passengers + 2,200 employees countries distribution agencies = 1 IT system B138 container ships + 467,000 TEU capacity = 5 million TEU 0 million offerings B11.1 million passengers + 2,200 employees + 50 aircraft = 1 airline B279 hotels swimming stem B138 container ships + 467,000 TEU capacity = 5 million TEU transport volume B2 x quality + 2 x strong brand 0 employees + 50 aircraft = 1 airline B279 hotels swimming pools + 165,000 beds = 36 million accommodations city = 5 million TEU transport volume B2 x quality + 2 x strong brand + 2 x size = Security & prospects B1 access ls swimming pools + 165,000 beds = 36 million accommodations B5 continents countries distribution 2 x strong brand + 2 x size = Security & prospects B1 access + 9 source markets = 20 million offerings B11.1 million

2 Table of Contents 2 Economic Situation 2 General economic situation 2 Special events in the quarter under review 3 Consolidated turnover and earnings 3 Development of turnover by divisions 4 Development of earnings by divisions 7 Development of the divisions 7 Tourism 14 Shipping 18 Consolidated earnings 21 Net assets and financial position 22 Other segment indicators 23 Prospects 25 Corporate Governance 26 Interim Financial Statements 26 Consolidated profit and loss statement 27 Consolidated balance sheet 28Statement of recognised income and expenses 28Cash flow statement 29 Notes 29 Accounting principles 30 Group of consolidated companies 31 Discontinuing operations 32 Notes on the consolidated profit and loss statement 34 Notes on the consolidated balance sheet 35 Changes in equity 35 Contingent liabilities 35 Other financial liabilities 36 Notes on the cash flow statement 36 Statements of changes in equity 37 Segment indicators 38Related parties 39 Responsibility Statement by Management 40 Review Report Reservation concerning future-related statements This interim report contains a number of statements related to the future development of TUI. These statements are based both on assumptions and estimates. Although we are convinced that these future-related statements are realistic, we cannot guarantee them, for our assumptions involve risks and uncertainties which may give rise to situations in which the actual results differ substantially from the expected ones. The potential reasons for such differences include market fluctuations, the development of world market commodity prices, the development of exchange rates or fundamental changes in the economic environment. TUI does not intend or assume any obligation to update any forward-looking statement to reflect events or circumstances after the date of these materials.

3 Interim Report 2nd Quarter 2007 Q TUI Group in figures million Q Q Var. % H H Var. % Continuing operations Turnover 5, , , , EBITDAR EBITDA EBITA n. m. of which tourism n. m. of which shipping n. m n. m. of which central operations n. m. Underlying EBITA n. m. of which tourism of which shipping n. m n. m. of which central operations n. m. Discontinuing operations EBITA Group EBITA n. m. Underlying EBITA n. m. Group profit/loss Basic earnings per share in Capital expenditure Equity ratio (30 June) in % Employees (30 June) 61,452 63, bstrain on the operating performance in tourism and shipping in Q2. bsubstantial improvement in earnings in both core businesses expected in the second half of bnet debt reduced to 2.7 billion. 1

4 Economic Situation in Q General economic situation In the first half of 2007, the world economy showed a clearly positive trend. World production showed almost the same robust growth as before, although the individual regions reported varying trends. In the US, production growth continued to weaken, while Japan continued to record an economic upswing. Production growth in the European Union, in contrast, slowed down slightly against the backdrop of an increase in overall economic capacity utilisation. The economy in the industrialised countries was boosted by the strong growth in the developing countries and the emerging economies. Special events in the quarter under review Update on the merger between TUI s tourism division and First Choice Holidays On 4 June 2007, the European Commission approved the merger between TUI s tourism division excluding the hotel companies pooled under TUI Hotels & Resorts and the British travel group First Choice Holidays PLC to form TUI Travel PLC, announced on 19 March The approval was granted subject to the condition that TUI AG sells its Irish subsidiary Budget Travel. On 29 June 2007, TUI AG and First Choice Holidays PLC published the prospectus for the planned merger for the listing on the London Stock Exchange. At an extraordinary annual general meeting held on 25 July 2007, the shareholders of First Choice Holidays PLC approved the merger by the required majority of three quarters of the votes. The closing of the merger, the listing and the first trading day for the shares of TUI Travel PLC on the London Stock Exchange is expected for 3 September The new company will be based in the UK. At 51 per cent of the shares, TUI AG will hold the majority in the new company, while the shareholders of First Choice Holidays PLC will hold 49 per cent. TUI Travel PLC will be fully consolidated in TUI AG s consolidated financial statements. Issuance of a convertible bond In May 2007, TUI AG issued an uncollateralised, non-subordinated convertible bond which was exclusively offered to institutional investors outside the US. TUI responded to the unusually strong demand and directly increased the originally planned initial volume of 550 million by 82.5 million. In addition, the banks mandated to place the bond exercised the greenshoe option of 61.5 million to cover surplus allocations. The total issuance volume of the convertible bond thus amounted to 694 million. The issuing proceeds will be used both for general corporate purposes and the potential refinancing of part of TUI s existing debt. 2

5 Economic Situation Interim Report 2nd Quarter 2007 Development of turnover by divisions Consolidated turnover and earnings Against the background of almost constant turnover in tourism and a decline in turnover by container shipping caused by the development of the US dollar exchange rate and freight rates, the business trend in the second quarter of 2007 and thus also the first half of the year showed clearly negative tendencies compared with Nevertheless, the Executive Board maintains its cautiously optimistic assessment of the development of the operative business in the overall year In tourism, the UK will see significant earnings improvements on the second half of 2007 year-on-year due to the market trend and the cost cuts. The Western Europe sector is also expected to show a substantial improvement since strains incurred in France in the second half of 2006 will not recur. The destinations are also expected to show positive trends, primarily driven by capacity trends. The Central Europe sector is characterised by earnings opportunities in the tour operator business, which is currently showing a very sound development, but also risks related to the seat load factor of the TUIfly fleet. The business trend over the next few weeks will be crucial to the earnings trend. Further changes in earnings will result from the merger with First Choice expected for early September. Upon completion of the merger with First Choice, the reporting structure in tourism will change. In addition, the inclusion of First Choice will create one-off as well as sustainable earnings effects. At the current point in time, a final assessment of the implications of these effects is not possible yet. In shipping, strong volume growth and a significant recovery in freight rates are observed in the substantial markets. This is also reflected by the development of freight rates between the first and the second quarter of The current development of the market environment is expected to enable shipping to generate positive operating earnings again in the near future and to create a sustainable market recovery. Turnover by divisions million Q Q Var. % H H Var. % Tourism 3, , , , Central Europe 1, , , , Northern Europe 1, , , , Western Europe , , Destinations Other tourism Shipping 1, , , , Central operations Continuing operations 5, , , , Trading Discontinuing operations Turnover by divisions 5, , , ,

6 Development of earnings by divisions In the second quarter of 2007, the turnover of the TUI Group s continuing operations tourism, shipping and central operations was 2.0% down year-on-year. Accumulated turnover for the first half of 2007 also declined by 2.2% year-on-year. At 3.6 billion, turnover by tourism matched 2006 levels in the second quarter of For the first half of 2007, turnover rose slightly by 1.4%. Adjusted for the development of turnover by the Other tourism sector, which still comprised prorated turnover from the divested business travel operations in the first quarter of 2006, turnover grew by 2.5% in the first half of The increase in turnover was supported in particular by the Central Europe sector and the destinations sector, which recorded significant growth in turnover. In the shipping sector, turnover declined by 4.2% to 1.5 billion in the second quarter and by 6.4% to 3.0 billion in the first half of This was due to the weakening of the US dollar against the euro and the year-on-year decline in freight rates in almost all trade lanes. At 13 million, turnover by central operations dropped by 75.7% year-on-year in the second quarter of 2007, and at 18 million it declined by 83.3% year-on-year in the first half of the year. This was primarily due to the divestment of the majority interest in Wolf GmbH, a heating and air conditioning company, in October 2006 and the resulting decline in turnover. In the 2007 financial year, the TUI Group no longer conducts any activities to be classified as discontinuing operations in accordance with IFRS regulations. In 2006, turnover of 123 million was generated in the second quarter and accumulated turnover of 401 million was generated in the first half of 2006 in the trading sector. At 5.2 billion, total turnover by the TUI Group s divisions was 4.2% down yearon-year in the second quarter of Accumulated turnover for the first half of 2007 totalled 9.3 billion, down 6.2% year-on-year. Earnings by divisions (EBITA) million Q Q Var. % H H Var. % Tourism n. m. Central Europe Northern Europe n. m Western Europe n. m Destinations Other tourism Shipping n. m n. m. Central operations n. m. Continuing operations n. m. Trading Divestments 5 Discontinuing operations Earnings by divisions (EBITA) n. m. Continuing operations Earnings by the continuing operations tourism and shipping as well as central operations (before interest, taxes and amortisation of goodwill) totalled 5 million in the second quarter of 2007, 84 million down year-on-year. Accumulated earn- 4

7 Economic Situation Interim Report 2nd Quarter 2007 ings for the first half of 2007 also declined to - 78 million, down 97 million. Both in 2007 and in 2006, earnings were affected by a number of one-off effects. In order to ensure a transparent presentation of the development of earnings by the divisions, a reconciliation to underlying earnings (underlying EBITA by division) is provided in the section below. Underlying EBITA by division: Tourism million Q Q Var. % H H Var. % EBITA by division n. m. Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division At 13 million, earnings by tourism dropped by 91.4%, a significant decline yearon-year. Accumulated earnings for the first half of 2007 also dropped by 293 million to million. Earnings for the second quarter included restructuring expenses of 3 million for the Dutch source market. They also included one-off items for the rebranding of the new TUIfly.com brand, one-off expenses for a conversion of the air passenger duty in the UK which could not be rolled over to passengers, one-off expenses for a revaluation of maintenance provisions in the wake of the planned merger between First Choice and TUI s tourism division as well as consultation fees in the framework of the planned merger totalling 32 million. On the other hand, gains on disposals from the divestment of the specialist tour operator operations in the Netherlands and lagging income from the divestment of the business travel operations (TQ3), already effected in the first quarter of 2006, of 19 million was generated in the second quarter In the second quarter of 2006, restructuring expenses for the reorganisation of source market Germany and a one-off expense in connection with litigation in the destinations sector totalling 12 million had been incurred. Adjusted for the one-off effects, underlying earnings declined by 66.9% in the second quarter of 2007 and by 152.1% in the first half of Underlying EBITA by division: Shipping million Q Q Var. % H H Var. % EBITA by division n. m n. m. Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division n. m n. m. At 13 million in the second quarter of 2007, earnings by the shipping division rose by 54 million year-on-year. Accumulated earnings for the first half of 2007 also increased year-on-year to 154 million, up 220 million. Earnings for the second quarter comprised one-off expense of 3 million from a contractual settlement payment in connection with the divestment of Montreal Gateway Terminals, sold in the first quarter of Further one-off income of 32 million from a revaluation of a risk position formed in the wake of the acquisition of CP Ships at the acquisition date had to be accounted for. On the other hand, a minor lagging expense of 1 million was incurred in the framework of the integration of CP Ships. In net terms, one-off effects of 31 million were generated. In the 2006 reference quarter, expenses of 46 million had been incurred for the integration of CP Ships. Adjusted for the 5

8 one-off effects, underlying earnings in the second quarter of 2007 amounted to - 15 million, down 20 million year-on-year. Underlying earnings for the first half of 2007 declined by 95 million year-on-year, in particular due to the operative result for the first quarter of Underlying EBITA by division: Central operations million Q Q Var. % H H Var. % EBITA by division n. m. Gains on disposals Restructuring expenses Other one-off items Revaluation of convertible options - 15 Underlying EBITA by division n. m. In the second quarter of 2007, earnings by central operations grew by 1 million year-on-year to - 21 million. For the first half of 2007, earnings declined by 24 million to - 8 million. Earnings in the second quarter of 2007 included restructuring expenses of 6 million, incurred in connection with the personnel adjustment measures taken by the TUI AG holding. In the 2006 reference period, no one-off effects had to be accounted for. Adjusted for the one-off effects, underlying earnings in the second quarter of 2007 rose by 7 million to - 15 million. At - 2 million, underlying earnings for the first half of 2007 declined slightly year-on-year. Discontinuing operations In the 2007 financial year, the TUI Group no longer conducts any discontinuing operations. In the second quarter of 2006, earnings from current business activities had totalled - 2 million. In the first half of 2006, earnings from current operations totalled 23 million, including lagging income from the divestment of the energy sector of 5 million in the first quarter of 2006 and a loss on disposal of 12 million from the divestment of the US steel trading activities in the second quarter of 2006, resulting in a net one-off expense of 7 million for the first half of 2006, to be included in the underlying EBITA. Underlying EBITA by divisions: Group million Q Q Var. % H H Var. % EBITA by divisions n. m. Gains on disposals Restructuring expenses Other one-off items Revaluation of convertible options - 15 Underlying EBITA by divisions n. m. In the second quarter of 2007, total earnings by the TUI Group declined by 94.3% to 5 million (previous year: 87 million). Accumulated earnings for the first half of the year amounted to - 78 million, down 120 million (previous year: 42 million). Adjusted for the one-off effects, underlying earnings totalled 18 million (previous year: 138 million) in the second quarter and million (previous year: - 13 million) in the first half of the year. 6

9 Economic Situation Interim Report 2nd Quarter 2007 Development of the divisions: Tourism Tourism Key figures million Q Q Var. % H H Var. % Turnover 3, , , , EBITA by division n. m. Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division Capital expenditure Employees (30 June) 52,081 52, At 3.6 billion, turnover by tourism matched 2006 levels in the second quarter of For the first half of the year, turnover rose slightly by 1.4% year-on-year. The Central Europe sector grew by 6.3% in the second quarter and by 7.2% in the first half of the year; this was due to the increase in customer numbers both in package tours but also the modular and seat-only businesses. The Northern Europe sector reported a slight increase in customer numbers and a decline in turnover of 9.4% in the second quarter and 4.4% in the first half of the year. The Western Europe sector recorded a slight decrease in turnover of 0.5% in the second quarter and an increase in accumulated turnover of 1.9% for the first half of the year, with an overall growth in customer numbers. The destinations sector recorded turnover growth of 22.1% in the second quarter and 18.8% in the first half of the year. Other tourism sector contained no more turnover due to the divestments in the 2006 financial year. Customer numbers tourism 000 Q Q Var. % H H Var. % Central Europe 3,203 2, ,110 4, Northern Europe 1,916 1, ,199 3, Western Europe 1,227 1, ,040 1, Total 6,346 6, ,348 9, At 13 million in the second quarter of 2007 and million in the first half of the year, total earnings by the tourism division dropped by 139 million and 293 million, respectively, year-on-year. One of the main reasons for the decline in earnings year-on-year in the first half of the year was the one-off income from the divestment of the business travel operations and the Dutch specialist tour operators totalling 163 million, included in earnings for the first quarter of Adjusted for the one-off effects, underlying earnings declined by 97 million yearon-year in the second quarter of 2007 and 108 million in the first half of the year. 7

10 Central Europe Central Europe Key figures million Q Q Var. % H H Var. % Turnover 1, , , , EBITA by division Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division Capital expenditure Employees (30 June) 9,752 9, Turnover and earnings In the Central Europe sector (Germany, Austria, Switzerland and airline TUIfly.com), the number of customers rose by 7.1% in the second quarter of 2007, with accumulated customer numbers for the first half of 2007 up 8.8%. Turnover grew by 6.3% in the second quarter and 7.2% in the first half of All source markets achieved year-on-year growth. At 41 million, earnings by the Central Europe sector dropped by 37.9% yearon-year in the second quarter of Earnings for the first half of the year also declined by 58.3% to - 57 million. Against the backdrop of an overall positive trend for travelling with TUI, the business trend in source market Germany was slightly curbed by additional expenses for the integration of the two airlines Hapag-Lloyd Flug and Hapag-Lloyd Express into the new brand TUIfly.com. The integration resulted in one-off rebranding expenses of 6 million for the new TUIfly.com brand in the second quarter of 2007 and 11 million for the first half of the year. Apart from the one-off expenses, another main reason for the drop in earnings was the decline in the seat load factor in the airline sector. Source markets Switzerland and Austria achieved a year-on-year increase in earnings. Adjusted for the one-off effects in the second quarter of 2007, underlying earnings totalled 47 million, down 34.7% year-on-year. Accumulated underlying earnings for the first half of the year amounted to - 46 million, a decline of 53.3%. Income of 8 million (previous year: 10 million) from sale-and-lease-back transactions for three aircraft was included in earnings for the second quarter. Customer numbers Central Europe 000 Q Q Var. % H H Var. % Germany 2,886 2, ,692 4, Switzerland Austria Central Europe 3,203 2, ,110 4, Germany In the second quarter of 2007, the travel market in Germany showed different trends. Customer numbers of the TUI tour operators and TUIfly.com grew by 7.6% year-on-year in the second quarter of 2007 and 9.1% for the first half of the year. This was largely attributable to the tour operators of TUI Deutschland both in the package tour but also modular segments and the seat-only business of TUIfly.com. Demand for tours to Egypt, Turkey and mainland Spain as well as longhaul destinations was very strong, while bookings of tours to the Balearic Islands, Greece and Cyprus still showed some restraint. 8

11 Economic Situation Interim Report 2nd Quarter 2007 Switzerland The Swiss tour operator market continued to show a very gratifying trend in the second quarter of TUI Suisse tour operators recorded an increase in customer numbers of 20.8%, both in the second quarter and the first half of This was largely attributable to the two brands TUI and 1-2-Fly. The strong growth of the FlexTravel brand slowed down slightly. Vögele recorded a slight decrease in bookings. Austria In Austria, the tour operator market weakened again in the second quarter of 2007, following a relatively good first quarter. TUI Austria reported a 2.4% drop in customer numbers year-on-year, with customer numbers declining slightly by 0.4% year-onyear in the first half of The TUI and Terra brands showed a relatively gratifying trend, while Gulet did not report a satisfactory performance yet. Demand was particularly good for North African destinations and Turkey. Bookings of the Balearic Islands and Portugal were less strong. Flight operations Central Europe Key figures Number of operated aircraft Seat kilometres (bn) Seat load factor (%) Q Q Abs. Q Q Var. Q Q Var. var. % %-points TUIfly.com TUIfly.com Following the integration of the two airlines Hapag-Lloyd Flug and Hapag-Lloyd Express in January 2007, the second quarter of 2007 was again characterised by the integration activities. In the framework of the fleet renewal programme, five new Boeing 737s were delivered in the course of the second quarter; so four more aircraft were operated year-on-year. The seat load factor declined significantly, partly due to the return of commitments. Northern Europe Northern Europe Key figures million Q Q Var. % H H Var. % Turnover 1, , , , EBITA by division n. m Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division n. m Capital expenditure Employees (30 June) 14,242 16, Turnover and earnings In the Northern Europe sector (UK, Ireland, Nordic countries and airlines Thomsonfly and TUIfly Nordic), the number of customers rose by 1.7% in the second quarter of 2007 and 3.3% in the first half of the year in a persistently difficult market environment. This growth in customer numbers was mainly driven by the increase in Thomsonfly s seat-only business. Turnover declined by 9.4% year-on-year in the second quarter and 4.4% in the first half of the year. Source market UK reported a decline in turnover, while the Nordic countries managed to expand their business volume. In the second quarter of 2007, earnings by the Northern Europe sector declined by 79 million year-on-year to - 36 million. Earnings for the first half of the year dropped by 106 million to million. Earnings in the second quarter 9

12 included one-off expenses of 4 million resulting from changes in the air passenger duty in the UK which could not be rolled over to customers and the revaluation of maintenance provisions in the framework of the merger between First Choice and TUI s tourism division of 20 million. In addition, the Northern Europe sector had incurred consultancy fees of 2 million in the framework of the merger mentioned above. In the 2006 reference period, no one-off effects had been included in earnings. Adjusted for the one-off effects, underlying earnings totalled - 10 million, a decline of 53 million year-on-year. The drop in earnings was primarily attributable to the difficult market environment and the strong price pressure in source market UK. However, following a very strong first quarter of 2007, the Nordic countries did not fully reproduce 2006 levels, either. For the first half of 2007, underlying earnings totalled million, a decline of 78 million. Earnings for the second quarter included income of 2 million from a sale-and-lease-back transaction for one aircraft in source market UK. Customer numbers Northern Europe 000 Q Q Var. % H H Var. % UK 1,513 1, ,506 2, Ireland Nordic countries Northern Europe 1,916 1, ,199 3, UK Ireland Nordic countries TUI UK s British tour operators operated in a persistently difficult market environment and reported a decline in customer numbers, while Thomsonfly recorded a substantial increase in customer numbers in the seat-only business. Total customer numbers rose by 2.8% year-on-year in the second quarter of 2007 and 3.7% yearon-year in the first half of In terms of medium-haul destinations, bookings of tours to France and Portugal rose for the 2007 summer season while bookings of Spanish destinations declined year-on-year. The long-haul segment reported sound demand for the new destinations Cape Verde Islands. The performance of the tour operators of the Specialist Holidays Group matched 2006 levels. While demand dropped for skiing tours as well as short- and long-haul trips, Al Fresco recorded an increase in bookings. In the second quarter of 2007, Ireland reported a 10.6% decline in customer numbers. For the first half of the year, customer numbers dropped by 8.4% year-on-year. The Nordic countries reported a satisfactory performance in the second quarter of The number of customers of TUI Nordic s tour operators grew by a total of 1.5% in the second quarter, with accumulated customer numbers for the first half of 2007 up 4.8%. Greece, Cyprus and Bulgaria recorded particularly good booking levels. 10

13 Economic Situation Interim Report 2nd Quarter 2007 Flight operations Northern Europe Key figures Number of operated aircraft Seat kilometres (bn) Seat load factor (%) Q Q Abs. Q Q Var. Q Q Var. var. % % points Thomsonfly TUIfly Nordic 5 5 +/ Thomsonfly TUIfly Nordic By means of route mix variation, Thomsonfly reduced the volume of seat kilometres offered in the charter flight segment for which demand was less strong. Despite this measure, the seat load factor dropped year-on-year due to the difficult market environment in the UK. Due to the delivery of two aircraft, the aircraft fleet was expanded accordingly year-on-year. The sound customer numbers of tour operators in the Nordic countries in the first quarter resulted in an expansion in the seat kilometre volume offered in the second quarter. Due to the decline in demand, the seat load factor dropped slightly year-onyear. The fleet size did not change year-on-year. Western Europe Western Europe Key figures million Q Q Var. % H H Var. % Turnover , , EBITA by division n. m Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division Capital expenditure Employees (30 June) 6,734 6, Turnover and earnings In the Western Europe sector (France, the Netherlands, Belgium and airlines Corsair, TUI Airlines Nederland and TUI Airlines Belgium), turnover matched 2006 levels in the second quarter of 2007, with an increase in customer numbers. Accumulated turnover for the first half of the year grew slightly by 1.9%. In the Netherlands, turnover declined in the entire reporting period and fell short of 2006 levels. This was due to the omission of the turnover of the Dutch specialist tour operators divested in the second quarter of In France, turnover grew year-on-year both in the second quarter and the first half of the year despite a decline in customer numbers. Belgium, too, reported a rise in turnover, which resulted from an increase in customer numbers. At - 22 million in the second quarter of 2007 and an accumulated level of - 57 million in the first half of the year, earnings by the division declined year-on-year. Earnings in the second quarter included one-off expenses of 3 million for the restructuring of business in the Dutch source market. Earnings in the 2006 reference quarter comprised a gain on disposal of 13 million from the divestment of the specialist operator business in the Netherlands. Adjusted for these one-off effects, underlying earnings dropped by 18.8% year-on-year. This was due to a temporary strain on earnings due to the expansion of capacity in flight operations in Belgium and slight restraint in the French travel market following a good performance in 11

14 the first quarter of The Dutch market showed a positive trend. Accumulated underlying earnings for the first half of the year declined by 24.4% to - 51 million. Customer numbers Western Europe 000 Q Q Var. % H H Var. % France Netherlands Belgium Western Europe 1,227 1, ,040 1, France Netherlands Belgium Following a gradual improvement in the situation on the French travel market in the first quarter of 2007, some French holidaymakers waited for the presidential and parliamentary elections in the second quarter before booking or starting their holidays. This trend impacted the business of Nouvelles Frontières to some extent, with customer numbers declining by 0.3% year-on-year. Accumulated customer numbers for the first half of the year also dropped by 1.4% year-on-year. Bookings of tours to Réunion recovered after the end of the chikengunya fever outbreak, and bookings of the new destination Mauritius were also very gratifying. Demand was also strong for tours to Turkey. Despite a difficult travel market, TUI s Dutch tour operators reported a sound performance in the second quarter. Despite the difficult environment, they reported an increase of 12.6% in customer numbers, with total growth in customer numbers of 2.8% for the first half of Demand was very strong for France, Turkey and the Caribbean in the second quarter, while Portugal and the Balearic Islands showing the strongest declines in bookings. In Belgium, the number of tour operator customers grew by 12.3% in the second quarter of 2007 and 13.0% in the first half of the year. In terms of flight operations, demand for Egypt and Turkey was very strong in the medium-haul segment, while the Caribbean reported strong growth in the long-haul segment. Bookings of self-drive tours matched 2006 levels, while city trips and short breaks recorded year-on-year growth in bookings. Flight operations Western Europe Key figures Number of operated aircraft Seat kilometres (bn) Seat load factor (%) Q Q Abs. Q Q Var. Q Q Var. var. % %-Pkt. Corsair TUI Airlines Nederland TUI Airlines Belgium Corsair TUI Airlines Nederland/Arkefly 12 In the second quarter of 2007, Corsair completed its fleet renewal programme with the decommissioning of the last Boeing The number of aircraft operated by the company was thus one down year-on-year. The rise in the demand in the long-haul segment resulted in a slight increase in the seat kilometre volume on offer and the seat load factor increased. In the second quarter of 2007, TUI Airlines Nederland operated two additional aircraft compared with the 2006 reference period. The seat kilometre volume rose accordingly with a slight decrease in the seat load factor.

15 Economic Situation Interim Report 2nd Quarter 2007 TUI Airlines Belgium/Jetairfly In the second quarter of 2007, TUI Airlines Belgium operated three additional aircraft compared with the 2006 reference period. Seat kilometres offered rose due to the substantial improvement in demand for tour operator products. The seat load factor for the expanded flight capacity was slightly down year-on-year. Destinations Destinations Key figures million Q Q Var.% H H Var.% Turnover EBITA by division Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division Capital expenditure Employees (30 June) 21,353 19, Turnover and earnings The destinations sector (incoming agencies and hotel companies) generated 22.1% growth in turnover year-on-year in the second quarter of Accumulated turnover for the first half of the year also rose by 18.8%. Both incoming agencies and hotel companies achieved turnover growth year-on-year. Earnings by the division dropped by 21.1% to 30 million in the second quarter of In the first half of 2007, earnings grew slightly by 2.3% to 45 million. There were no one-off effects to be adjusted in the second quarter of The relevant 2006 quarter included a one-off expense of 6 million for litigation in connection with a lease agreement for holiday club facilities. Adjusted for this effect, underlying earnings for the second quarter of 2007 declined by 31.8%; however, the year-on-year decline only amounted to 10.0% for the first half of the year. The drop in earnings observed in the period under review was mainly attributable to expenses for the renovation of a Robinson Group club complex and the associated reduction in opening times in the current year Moreover, earnings in the second quarter of 2006 had included income from the divestment of a complex of the Robinson Group. Incoming agencies Hotel companies In the second quarter of 2007, incoming agencies reported a satisfactory business trend. The number of guests catered for in the second quarter of 2007 was 3.22 million, a 6.1% increase year-on-year. Agencies in the western Mediterranean reported a slight decrease in guest numbers in the second quarter. TUI España recorded a slight drop in guest numbers, which primarily resulted from source market UK. TUI Portugal also reported a decrease in guest numbers, with business in the Cape Verde Islands continuing to rise. In the eastern Mediterranean, the TUI Türkiye agency again recorded a positive trend in terms of guest numbers. In Greece, Bulgaria and Egypt also, guest numbers continued to rise in the second quarter. The long-haul segment reported a declining trend: The Dominican Republic suffered strong declines in guest numbers. Mexico saw a decline in the number of guests catered for, in particular from France and the UK. In the second quarter of 2007, overall occupancy rates in the hotel companies of the Hotels & Resorts segment exceeded 2006 levels, with a slight increase in capacity. For seasonal reasons, some complexes of all hotel companies opened only in 13

16 the course of the second quarter. RIU hotels reported a slight expansion in capacity year-on-year and reproduced 2006 occupancy rates. Hotels in Spain, in particular, reported gratifying growth in occupancy rates. The long-haul destinations recorded high occupancy rates, with the Dominican Republic being the only exception and reporting a decline. Robinson Clubs reduced their capacity slightly and achieved a slight increase in occupancy rates year-on-year. The number of clubs already opened, roughly reproduced 2006 levels. Magic Life reduced its capacity substantially and thus achieved an increase in occupancy rates year-on-year. In Turkey and Egypt, Iberotel minimally decreased its capacity and achieved an increase in occupancy rates year-on-year. Grecotel reduced its capacity slightly and achieved a slight year-on-year increase in occupancy rates. Grupotel hotels were impacted to some extent by the fact that the positive trend recorded by the Balearic Islands in the first quarter did not continue, reporting a slight decrease in occupancy rates with a minimal increase in capacity. Other tourism Other tourism Key figures million Q Q Var. % H H Var. % Turnover EBITA by division Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division 2-1 Capital expenditure Employees (30 June) 470 In 2006, the Other tourism sector still comprised the business travel operations and the IT services companies of TUI InfoTec. The divestment of the business travel operations to the Dutch BCD Holdings N.V. was closed on 31 March In September 2006, a 50.1% majority in TUI InfoTec was sold to the Indian software company Sonata Software Limited. The transaction was closed on 24 November Development in the divisions: Shipping The shipping division comprises the container shipping and cruise businesses of the Hapag-Lloyd Group. Shipping Key figures million Q Q Var. % H H Var. % Turnover 1, , , , EBITA by division n. m n. m. Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division n. m n. m. Capital expenditure n. m Employees (30 June) 8,451 8, The year-on-year decline in freight rates in almost all trade lanes and the persistent weakness of the US dollar caused a reduction in turnover in the shipping division, amounting to 4.2% in the second quarter of 2007 and 6.4% in the first half of 14

17 Economic Situation Interim Report 2nd Quarter At 1.5 billion in the second quarter of 2007 and 3.0 billion in the first half of 2007, the container business accounted for the bulk of turnover by the division; this corresponded to minus 4.3% and minus 6.6%, respectively. Hapag-Lloyd Kreuzfahrten generated turnover of 36 million in the second quarter of 2007 and 86 million in the first half of the year; turnover thus declined by 1.4% year-onyear for the quarter and increased by 1.1% for the first half of the year. Total earnings by the shipping division stood at 13 million (previous year: - 41 million) in the second quarter of 2007 and 154 million (previous year: - 66 million) in the first half of the year, a substantial increase year-on-year. Container shipping contributed 14 million to these earnings in the second quarter, with accumulated earnings of 152 million in the first half of the year. Hapag-Lloyd Kreuzfahrten generated - 1 million in the second quarter and 2 million in the first half of the year. Adjusted for the one-off income from the divestments and the one-off expenses for the integration of CP Ships, underlying earnings fell by 20 million to - 15 million in the second quarter of 2007; due to the weak performance in the first quarter of 2007, underlying earnings for the first half of the year declined by 95 million to - 68 million in the first half of the year. Container shipping Container shipping (incl. CP Ships) Key figures million Q Q2 2006Var. % H H1 2006Var. % Turnover 1, , , , EBITA by division n. m n. m. Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division n. m n. m. Reporting structure Turnover and earnings In the wake of the operative integration of CP Ships, acquired in October 2005, into Hapag-Lloyd, the freight rates and transport volumes for Hapag-Lloyd and CP Ships have been jointly presented and broken down according to the geographical structure of the trade lanes since the third quarter of To this end, CP Ships key figures were broken down accordingly for 2006 and determined statistically for the reference periods in order to create a basis for comparisons. Turnover by container shipping declined by 4.3% to 1.5 billion in the second quarter of For the first half of the year, turnover of 3.0 billion was recorded, down 6.6% year-on-year. This resulted from the decline in the US dollar exchange rate against the euro and the year-on-year drop in freight rates (Q2 2007: - 5.6% on average; H1 2007: - 6.8% on average) in almost all trade lanes. The transport volume rose by 7.4% to a total of 1,382 thousand standard containers (TEU) yearon-year in the second quarter of 2007 and by 8.6% to a total of 2,697 thousand TEU in the first half of the year. Earnings rose to 14 million, up from - 39 million in the 2006 reference quarter, with accumulated earnings for the first half of the year rising to 152 million from - 68 million. Earnings comprised one-off expenses of 3 million for the divestment of Montreal Gateway Terminals. In addition, one-off income of 32 million was generated from the revaluation of a risk position formed in the wake of the acquisition of CP Ships, entailing lagging expenses of 1 million for the integration of 15

18 CP Ships. In net terms, one-off effects to be included in underlying EBITA totalled 31 million. In the 2006 reference quarter, expenses of 46 million had been incurred in the wake of the integration of CP Ships. For the first half of 2007, gains on disposal from the divestment of Montreal Gateway Terminals and the minority holding in Germanischer Lloyd AG of 193 million were generated. On the other hand, integration expenses were incurred for CP Ships, while one-off income was generated from the revaluation of the above-mentioned risk position for CP Ships, resulting in an amount of 29 million in net terms. Adjusted for the one-off effects, underlying earnings in container shipping totalled - 14 million in the second quarter of 2007 and - 70 million for the first half of the year. This corresponded to a decline in earnings of 21 million year-on-year for the second quarter and of 95 million for the first half of Development of the trade lanes Transport volumes Hapag-Lloyd (incl. CP Ships) 000 TEU Q Q2 2006Var. % H H1 2006Var. % Far East Trans-Pacific Atlantic Latin America Australasia Total 1,382 1, ,697 2, Freight rates Hapag-Lloyd (incl. CP Ships) US dollar/teu Q Q2 2006Var. % H H1 2006Var. % Far East 1,266 1, ,251 1, Trans-Pacific 1,422 1, ,402 1, Atlantic 1,451 1, ,459 1, Latin America 1,345 1, ,368 1, Australasia 1,179 1, ,179 1, Ø for all trade lanes 1,350 1, ,348 1, In its new, integrated structure, Hapag-Lloyd generated growth in transport volume of 7.4% year-on-year in the second quarter of Accumulated transport volume growth stood at 8.6% for the first half of the year. With the exception of Australasia, all trade lanes reported growth. On the other hand, freight rates declined in almost all trade lanes, the sole exception again being the Far East trade lane. Average freight rates for all trade lanes declined by 5.6% in the second quarter of 2007 and 6.8% in the first half of Since the beginning of the second quarter of 2007, freight rates have picked up again slightly in almost all trade lanes so that the decline in freight rates slowed down over the previous quarter. The Far East trade lane again benefited from the strong increase in export volumes from China on its routes from Asia to Europe. This trade lane recorded growth in transport volumes of 16.6% year-on-year in the second quarter and 20.7% in the first half of the year. The Far East trade lane was the only trade lane reporting an increase in freight rates, with growth of 4.5% in the second quarter and 3.6% in the first half of the year. This growth was due to the fact that freight rates could be successfully increased on the routes from Asia to Europe. 16

19 Economic Situation Interim Report 2nd Quarter 2007 The Trans-Pacific trade lane recorded sound growth of 8.7% year-on-year. At 9.1%, the transport volume also grew year-on-year for the first half of the year. Growth slowed down slightly on the routes from Asia to North America; this trend, however, was more than offset by growth in transport volumes in the opposite direction. Competitive pressure intensified on the route from Asia to North America, resulting in a decline in average freight rates of 6.0% in the second quarter and 7.6% in the first half of the year. In the Atlantic trade lane, the transport volume grew by 6.1% year-on-year in the second quarter of 2007 and 4.3% in the first half of the year. This was primarily attributable to transports from North America to Europe. Freigth rates in this trade lane dropped by 13.1% in the second quarter and 13.0% in the first half of the year. This decline was attributable to persistently strong competition in this trade lane, causing a drop in freight rates, in particular on the routes from Europe to North America. In the Latin America trade lane, the transport volume grew by 11.8% year-on-year in the second quarter and by 10.5% in the first half of the year. Imports rose particularly strongly on the routes from Asia to North America. Freight rates declined by 6.4% in the second quarter and 6.6% in the first half of the year. This trend affected in particular transports from Europe to Latin America. However, rates picked up again towards the end of the second quarter, a trend that mitigated the year-on-year decline in freight rates to some extent. In the Australasia trade lane, the transport volume dropped by 12.2% year-on-year in the second quarter and 5.7% in the first half of the year. Average freight rates declined by 2.0% year-on-year in the second quarter and 4.8% in the first half of the year. This decline was primarily attributable to a drop in freight rates in intraregional transports in Asia already observed at the beginning of Hapag-Lloyd Kreuzfahrten Hapag-Lloyd Kreuzfahrten Key figures million Q Q2 2006Var. % H H1 2006Var. % Turnover EBITA by division /- 0 Gains on disposals Restructuring expenses Other one-off items Underlying EBITA by division /- 0 Turnover and earnings In the second quarter of 2007, Hapag-Lloyd Kreuzfahrten continued to record a positive business trend. Passenger numbers rose substantially year-on-year, causing a gratifying increase in the load factor of the ships. In the second quarter of 2007, turnover totalled 36 million, slightly down 1.4% year-on-year. For the first half of the year, turnover grew by 1.1% to 86 million. Earnings in the second quarter of 2007 improved from - 2 million to - 1 million year-on-year. At 2 million, accumulated earnings for the first half of the year matched the previous year s level. 17